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Markets Pulse

Nikkei Reclaims 10,000 Mark

The Nikkei Stock Average surged above 10,000 for the first time in 8 1/2 months Wednesday morning, helped by confidence over U.S. ‘fiscal cliff’ talks and a weaker yen.

As of 0022 GMT, the benchmark index was up 1.3% at 10,047.47, after hitting its highest level since April 3.

“The surge through 10,000 has been building for the last month, and as such, doesn’t come as a total surprise,” said Tachibana Securities market analyst Kenichi Hirano, noting that long interest as well as short-covering have been prevailing themes since mid-November, when reports of the just-concluded lower house elections sparked hopes that the more traditionally business-friendly Liberal Democratic Party would likely sweep to power.

The LDP and its allies did just that Sunday, winning more than two-thirds of the chamber’s seats, and giving it a powerful position to push through policy goals, which include pressuring the Bank of Japan to implement more monetary easing and to set a more aggressive inflation target.

The BOJ is in the middle of its final scheduled policy board meeting of 2012, and is slated to announce its decision Thursday.

“The coalition’s supermajority win now gives it an utterly unequivocal mandate to hit the ground running with its plans,” says CLSA equity strategist Nicholas Smith. “The BOJ would be very unwise to ignore the people’s decision.”

“It’s important to note that the buying we’ve been seeing over the past few weeks from overseas has represented predominately short-term interest from hedge funds and others who have felt too underexposed in Japan,” Hirano says. “The numbers don’t reflect increasing long-only and pension-fund interest, at least not yet.”

“Now that the elections are over, the new government’s Cabinet makeup, as well as budget and overall policy plans are next on the watch list,” said Yoshihiro Okumura, general manager at Chibagin Asset Management.

The LDP and New Komeito party have reportedly already agreed among themselves to pass a sizable fiscal 2012 supplementary budget that could exceed some ¥10 trillion.